European stocks climbed for a third day after a report on U.S. durable-goods orders beat forecasts amid ongoing speculation that the Federal Reserve will act to bolster the economy.
Daimler AG (DAI) and Fiat SpA (F) led a gauge of automakers to the biggest gain in 13 months. Ageas, the majority owner of Belgium’s largest life insurer, surged 21 percent after announcing a buyback. WPP Plc (WPP), the world’s largest advertising company, advanced 7.4 percent as profit beat estimates. Heineken NV (HEIA), the world’s third-biggest brewer by volume, tumbled the most since 2003 after saying earnings are unlikely to grow this year.
The Stoxx Europe 600 Index rose 1.4 percent to 229.79 at the 4:30 p.m. close in London, extending the advance from the two-year low reached at the end of last week to 3 percent. The gauge has still fallen 21 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed economists’ forecasts added to concern the global recovery is at risk.
“Everyone is waiting for Friday’s meeting of the Federal Reserve,” said John Plassard, a director at Louis Capital Markets in Geneva. “Until then, every bit of good news, such as the strong durable-goods numbers, will support the markets.”
Central bankers are meeting this weekend in Jackson Hole, Wyoming. At last year’s event, Fed Chairman Ben S. Bernanke’s hint of a second round of asset purchases, or quantitative easing, spurred a 28 percent jump in the Standard & Poor’s 500 index through April.
FTSE, CAC 40
National benchmark indexes advanced in all of the 18 western European markets, except Greece and Iceland. France’s CAC 40 rose 1.8 percent, the U.K.’s FTSE 100 gained 1.5 percent and Germany’s DAX Index climbed 2.7 percent.
The valuation of Stoxx 600 companies as a multiple of their estimated earnings has slipped to 9.5, near the lowest since March 2009, according to data compiled by Bloomberg.
“Investors are starting to look through the dark cloud to see the promised land of cheap valuations,” said Henk Potts, who helps oversee $239 billion as an equity strategist at Barclays Wealth in London. “It’s not bargains that matter, it is buyers. And finally investors seem to be willing to put their heads above the parapet.”
European stocks extended their gains as a Commerce Department report showed that U.S. orders for durable goods climbed more than forecast in July. Bookings for goods meant to last at least three years rose 4 percent, the most in four months, after falling a revised 1.3 percent in June. The median projection of 81 economists surveyed by Bloomberg News called for a 2 percent gain.
Daimler, the maker of Mercedes trucks and luxury cars, rose 5.2 percent to 36.05 euros and Fiat climbed 6.6 percent to 4.21 euros as a gauge of European carmakers rallied the most of the 19 industry groups in the Stoxx 600.
The gain in U.S. durable-goods orders reflected a rebound in production at vehicle makers following supply disruptions caused by the earthquake in Japan in March. Orders for motor vehicles and parts jumped 12 percent, the most since 2003.
Ageas (AGS), the majority owner of Belgium’s largest life insurer, rose 21 percent to 1.33 euros, the most since May 2010, after saying it will buy back as much as 250 million euros ($360 million) of shares. The company also reported a first-half net loss of 58.8 million euros, narrower than the 115 million-euro loss analysts had projected.
WPP jumped 7.4 percent to 623 pence as first-half earnings beat analysts’ estimates after sales in emerging markets grew 11 percent from a year earlier. Profit, excluding some items such as the impact of interest and taxes, rose to 517.9 million pounds ($854 million) from 455.3 million pounds a year ago, beating the 512.6 million pounds analysts had forecast in a Bloomberg News survey.
Tullow Oil Plc (TLW), the London-based explorer with the most licenses in Africa, rallied 8.4 percent to 1,026 pence after saying that profit after tax more than tripled to $330 million as oil production from Ghana boosted revenue in the first six months of the year.
Man Group Plc (EMG), the world’s largest hedge fund manager, soared 10 percent to 216.1 pence after Nitin Arora, an analyst at HSBC Holdings Plc, raised the stock to “overweight” from “underweight.”
Holcim Ltd. (HOLN), the world’s second-largest cement maker, jumped 5 percent to 46.55 Swiss francs after Credit Suisse Group AG lifted the company’s shares to “outperform” from “neutral.”
A gauge of construction companies was among the best performers of the 19 industry groups in the Stoxx 600. Hochtief AG (HOT), Germany’s largest builder, rose 3.4 percent to 46.34 euros and Carillion Plc (CLLN), a U.K. support and construction-services company, added 3.8 percent to 323 pence. Carillion was raised to “buy” from “add” by Howard Seymour, an analyst at Numis Securities Ltd.
Heineken dropped 7.6 percent to 33.44 euros, its biggest slump since June 2003, after reporting first-half earnings before interest and taxation, excluding one-time items, of 1.26 billion euros, missing the median analyst estimate of 1.37 billion euros.
The company said full-year profit is unlikely to grow, saying so-called organic net income for 2011 will be “broadly in line” with last year’s 1.45 billion euros. Analysts forecast adjusted profit of 1.68 billion euros.
Royal Unibrew A/S (RBREW), Scandinavia’s second-largest brewer, sank 5.6 percent to 269 kroner after the company said it expects 2011 revenue and earnings to be in the lower end of its previously expected ranges due to “unusually bad weather” and consumer restraint, especially in Italy.
Admiral Group Plc (ADM) slumped 12 percent to 1,353 pence, the biggest drop since December 2008. The U.K. car insurer posted first-half pretax profit that missed analyst estimates after it held back more cash to cover claims from previous years.
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